The reseller agreement from the repositories states that each purchased credit report is for one-time-use only. This means that every time the credit report is viewed by another end user, such as Fannie Mae or Freddie Mac, a secondary use fee must be paid. In essence, the credit report must be “re-purchased” each time some other entity looks at it, even if it is the exact credit report you already pulled and paid for.
WHEN DOES SECONDARY USE OCCUR?
Secondary use of consumer credit data occurs when the originating end user (lender or broker) provides the consumer credit report, or any portion thereof, to a third party business entity or person (typically a sponsoring lender).
EXAMPLE OF SECONDARY USE:
- Mortgage brokers who order a credit report and then deliver a copy of that report to a wholesale lender.
- Lenders who order a credit report and then request a copy of that report be sent to Desktop Underwriter.
WHY HAVE SECONDARY USE POLICIES BEEN GENERATED?
The 3 national credit bureaus (Equifax, Experian, and TransUnion) created these policies to address issues regarding FCRA compliance, data security, and data accuracy as well as providing consumers with a means to know which entities are reviewing their personal credit data.
WILL THIS REPLACE MY RE-ISSUE FEES FROM THE GOVERNMENT SPONSORED ENTERPRISES (GSEs) & OTHER AUTOMATED UNDERWRITING SYSTEMS?
No, the Secondary Use fee is in addition to your standard reissue fees.
WHAT ARE SOME SITUATIONS WHERE A SECONDARY USE FEE WILL BE CHARGED?
- 1st Scenario – A credit report is reissued to lenders with access to Fannie Mae or Freddie Mac. The GSEs will report each lender who receives the credit report as a Secondary User. You will be billed a Secondary Use fee for each of the secondary users.
- 2nd Scenario – A credit report is sent to multiple lenders based upon the underwriting criteria for each lender through a multi-lender platform to qualify a consumer for multiple loan options. In this situation, the primary broker is the End User. Each lender that receives the credit report will be posted as a Secondary User. You will be billed a Secondary Use fee for each of the secondary users.
- 3rd Scenario – A Secondary User requests a copy of the original credit report. An example would be when a lender with a reference number requests a credit report through Birchwood that was previously issued to a mortgage broker. In this case the credit bureaus will post a soft inquiry for the Secondary User and you will be billed a Secondary Use fee.
DOES SECONDARY USE LOWER A BORROWER'S CREDIT SCORE?
No; the reissue of a consumer credit report to a lender only effectively transmits the report data to the lender, so the consumer’s credit report is not re-accessed by the receiving party. In addition, all secondary use inquiries are considered to be “soft” inquiries which by nature do not affect the consumer’s score.